Thursday, August 31, 2017

SG Market (31 Aug 17)

MARKET OVERVIEW
- The market could edge higher on strong US economic data but gains may be capped by light pre-holiday trading.
- Technically, downside risk for STI lies at 3,220, with immediate resistance at 3,275.

POSITIVE NEWS
*Cityneon
- Acquired the global IP rights to Jurassic World: The Exhibition for US$25m, or 5x forward P/E based on a profit guarantee for its current Chicago tour ending Jan '18.
- This is its third franchise after Avengers S.T.A.T.I.O.N and Transformers: Autobot Alliance.
- Trades at 16x forward P/E.

*Oxley
- Acquiring all six residential units at Toho Green condominium at Yio Chu Kang Road for $8.4m for redevelopment.
- The 99-year leasehold property sits on a land area of 1,313 sqm.
- Trades at 7.7x trailing P/E and 1.6x P/B.

*Yongnam
- Secured three contracts worth $70m for projects in Singapore and Myanmar.
- One of the Singapore projects involves the installation of structural steelwork for JTC Logistics Hub @ Gul, while the second project is for the supply of king posts and strutting works for Woodlands Health Campus.
- The Myanmar project is for main building works for extension of the Japan Tobacco Int'l factory.
- All projects are expected to be completed between 2018 and 2019.

NEGATIVE NEWS
*TTJ
- Terminated its agreement with the Building and Construction Authority to manage and operate Jurong Dormitory, due to unexpected complexity in the building retrofitting works.

NEUTRAL NEWS
*Sembcorp Industries
- Acquired the remaining 28% stake in Sembcorp Green Infra (SGI) from IDFC Private Equity Fund III for $301m.
- SGI has close to 1,200 MW of wind and solar power capacity in operation and under development in India and contributed net profit of $39m, or 10% of the group's FY16 earnings.
- The deal will allow the group more flexibility to drive further growth within the renewable energy sector in India.
- Trades at 13.9x forward P/E.

*Yangzijiang
- Entered placement agreement with JP Morgan for 137m new shares (3.6% existing share capital) at $1.53 apiece.
- Net proceeds of $208.8m will be used to fund new investments and working capital.
- Upon completion, net cash will be lifted to Rmb2,099.4m from Rmb1,081m.

*Hi-P
- Dismissed claims that the group has been approached for a possible buyout or strategic tie-up, in relation to an article published on Straits Times.

*Aspen
- 30% owned Aspen Vision Land completed the acquisition of a 41-acre plot of land in Penang, Malaysia for RM67.9m.
- Additionally, the associate will also acquire another 45-acre plot in the vicinity for RM98m.
- The acquisitions are in line with the group's planned development of Aspen Vision City.

*Sincap
- Proposed placement of up to 420.25m new shares at a minimum price of $0.018 apiece to raise net proceeds of at least $8m.
- The new shares represent 33.3% of the enlarged share capital.
- KGI Securities has been appointed as the agent for the proposed placement.

Wednesday, August 30, 2017

SG Market (30 Aug 17)

MARKET OVERVIEW
- Likely to see technical rebound following yesterday's decline after US President Trump's measured response to North Korean missile launch eased fears of further geopolitical escalation.
- Technical outlook remains weak with STI trading below its 20 and 50-dmas. Downside risk lies at 3,220, while topside resistance is at 3,275.

CORPORATE RESULTS
*Cordlife
- Dipped into FY17 net loss of $2.6m from $12.3m profit last year, due to absence of FX, fair value and disposal gains.
- Revenue was muted at $59.9m (+0.6%) despite the inclusion of Malaysian-based Stemlife.
- Gross margin narrowed 1.4ppt to 64.8% on lower profitability of Stemlife, and new offering of cord tissue banking, which has lower price point to cater to the mass-market.
- Proposed final DPS of 0.5¢ (FY16: nil)
- NAV/share at $0.4831.

*DiSa
- 4QFY17 net loss narrowed to $4m (4QFY16: $7.7m) in absence of impairment loss, bringing FY17 loss to $16m (+48.3%).
- Last quarter revenue slumped 76.6% to $146,000 due to negligible sales generated from its energy management services (-94.2%), while its anti-theft systems brought in maiden contributions of $46,000 in the technology segment.
- The group burned through more operating cash outflow of $1.6m (4QFY16: -$242,000).
- NAV/share at 0.25¢.

*Dukang Distillers
- FY17 net loss swelled to Rmb112.4m (FY16: Rmb10.7m), battered by impairment loss of Rmb31m.
- Revenue fell 46.3% to Rmb464.5m on overall weaker sales volumes (-42.5%) and ASPs (-6.5%).
- Gross margin contracted to 26.1% (-8.7ppt).
- Bottom line was further hit by revaluation loss on non-current assets (Rmb4.9m), production suspension costs (Rmb6.8m) and compensation on purchases returns (Rmb8.8m).
- NAV/share shrank to Rmb16.42 (-8%).

POSITIVE NEWS
*DBS
- Launched its digibank in Indonesia that uses technology such as biometrics and AI to serve banking customers.
- Among other benefits, its customers will be able to open an account with no minimum balance and earn 3% interest.
- Its other digibank which was set up in India, has secured more than 1m customers.
- MKE last had a Hold with TP of $21.50.

*StarHub
- Partnering with tech giant Google to offer its mesh networking device, Google Wifi exclusively in Singapore.
- Mesh networking systems will allow users to enjoy coverage across various rooms and is more effective than routers.
- Customers will be able to buy a three-pack Google Wifi 24-month bundle at $15/month on selected StarHub broadband plans from 31 Aug.
- StarHub will hope the tie-up will improve its broadband segment, which last suffered a 3% decline in service revenue on a drop in subscribers (-1.3%) as well as ARPU (-2.7%) in 2Q17.

*ISOTeam
- Secured 15 projects worth a total of $24.2m, and are slated to complete progressively between 2H17 and Aug '19.
- Bulk of the contracts are for its addition & alteration ($16.8m), mechanical & electrical ($3.2m), and repair & redecoration (R&R) segments.

NEGATIVE NEWS
*Swiber
- Lodged a statutory declaration of its subsidiary, Swiber Engineering's inability to continue business.
- Meetings between the company and its creditors will begin on 8 Sep.
- Appointed KPMG as interim liquidators of the subsidiary.

NEUTRAL NEWS
*ST Engineering
- Injected $10.2m into LeeBoy India Construction Equipment, which designs and manufactures construction equipment for the infrastructure and coal industries.
- Separately, the group is also partnering Alpha Ori Tech to build two IT-based platforms to 1) consolidate smart data and apply analytics to improve fleet management for ship owners and operators and 2) provider machine learning solutions and anti-collision capabilities.
- Both partners will also look to strengthen cyber security for shipborne systems.

*Z-Obee
- Delisting from the SGX in order to save on admin and compliance costs.
- The group will keep its primary listing on the HKEx.

Monday, August 28, 2017

SG Market (28 Aug 17)

MARKET OVERVIEW
- Investors will have plenty of US and China economic data to chew this week but the biggest risk issues would be Trump's renewed threat to scrap Nafta and his long-awaited tax reform agenda.
- Technically, the STI remains in oversold territory with immediate resistance at 3,275 and underlying support at 3,220.

SECTOR WATCH
*Property
- Maybank KE believes that a resurgent enbloc market offers alternative land banking opportunities for developers and could ease upwards pressure on land prices.
- Over $3b worth of deals have been concluded so far and another 30 properties are in various stages of the collective sale process.
- Together with six confirmed sites in 2H17 GLS, we see potential 12,400 units added to Singapore's residential pipeline.
- Enbloc sales also front-load demand with displaced households looking out for new properties and could potentially reduce the 16,900 unsold inventory.
- MKE is positive on property developers. UOL (Buy, TP: $9.43) and City Dev (Buy, TP: $12.05) are its top large-cap picks, while GuocoLand (Buy, TP: $2.75) offers compelling relative value.

CORPORATE RESULTS
*GuocoLand
- 4QFY17 net profit surged to $244.8m (4QFY16: $39.8m) and brought FY17 earnings to $357.2m (-41%), meeting expectations. The slide was due to absence of one-off gain arising from disposal of Dongzhimen project last year.
- For the quarter, revenue soared 90% to $407.4m on faster-than-expected sale recognition from Singapore residential projects.
- Gross margin widened 4.6ppt to 24.4%.
- Bottom line was boosted by $254.5m (4QFY16: $14.6m) fair value gain from revaluation of Guoco Tower at Tanjong Pagar Centre.
- Net gearing eased to 0.84x from 1x in Mar '17.
- Proposed final DPS of 7¢ (FY16: final 5¢, special 4¢).
- Last traded at 0.72 P/B. Maybank KE has a Buy with TP of $2.75

*Silverlake Axis
- 4QFY17 net profit tumbled 58% to RM32.7m as it incurred wider losses from associates/JVs of RM5.3m (4QFY16: -RM0.08m). This brought FY17 core earnings to RM160.7m (-41.3%), which missed estimates.
- For the quarter, revenue fell 25% to RM124.9m, hurt by lower contributions from software licensing (-88%), maintenance and enhancement services (-11%), sale of software and hardware products (-49%).
- Gross margin contracted 20ppt to 46% amid weaker software licensing business.
- Drop in bottom line was pared by a positive RM10.7m FX swing.
- Proposed final DPS of 0.3¢ (4QFY16: 1¢) and special DPS of 1¢ (4QFY16: nil), bringing full-year payout to 4.5¢ (FY16: 3¢).
- Trades at 20.1x forward P/E

*GL
- FY17 net profit fell 28% to US$49m on revenue of US$350.2m (-11%).
- Revenue decline was mainly due to lower contributions from its hotel (-10%), gaming (-53%) and property development (-67%) segments.
- RevPAR declined 10% due to the weaker GBP.
- Bottom line was further hit by a legal settlement in the UK, US$3.7m write-off on property and equipment as well as a 38% jump in net financing cost.
- Maintained first and final DPS of 2.2¢.
- NAV/share at US$0.808

*AusGroup
- Turned around to 4QFY17 net profit of A$2.4m (4QFY16: A$165.1m loss) in absence of A$130.9m impairment on fixed assets and intangibles.
- This swung FY17 results to a net profit of A$4.7m (FY16: A$258.9m loss).
- Quarterly revenue rose 18% to A$121.2m on increased work on core projects in the energy and process sector.
- Gross margin slipped to -0.9ppt to 7.8%.
- Bottom line was also buttressed by a A$5.5m net gain from partial debt restructuring, and A$4.3m drop in tax to A$2.9m.
- NAV/share at A$0.017

POSITIVE NEWS
*ST Engineering
- Acquired rig repair assets adjacent to its existing yard, VT Halter Marine in Pascagoula, Mississippi, US from World Marine of Mississippi for US$25m.
- These assets comprise a purpose-built facility of 94 acres for heavy marine fabrication, and offshore oil and gas rig upgrades, repairs and conversions.

*ISOTeam
- SG Bike, a 51:27:22 JV with Sean Tay and Andy Tay, has launched a bike sharing scheme at Bukit Panjang, which is expected to broaden group revenue base.
- The JV aims to address issue of indiscriminate parking by working out a solution with local authorities.

*Ley Choon
- Secured a PUB contract worth $1.4m relating to trial trenching works for water projects.

NEGATIVE NEWS
*SPH
- Proposing to divest 19.3m shares (~40% stake) in Mediacorp Press and 18m shares (20% stake) in Mediacorp TV to Mediacorp for $9.4m and $8.6m respectively.
- The group expects to record a write-down of $31m due to the transaction.

NEUTRAL NEWS
*UOL/Haw Par
- UOL exercised call option to acquire 60m shares of UIC from Haw Par via issue of 27.3m new shares.
- This will increase UOL's stake in UIC to about 48.94% from 44.71%.
- The transaction is expected to be completed by early Sep '17

*Tiong Seng/Ocean Sky
- 60:40 JV to acquire Sloane Court Hotel and adjacent plot of land at Balmoral Road for $80.5m or $1,292 psf ppr.

Friday, August 25, 2017

SG Market (25 Aug 17)

MARKET OVERVIEW
- Investors could tread cautiously ahead of the weekend after seeking for safe haven markets on concerns over dysfunctional US politics and Fri's central bank summit at Jackson Hole that could signal a shift from the easy money policies.
- Technically, the STI remains in oversold territory and may test its immediate resistance at 3,275, with underlying support at 3,190.

CORPORATE RESULTS
*Wing Tai
- 4QFY17 net profit surged 5-fold to $9.5m (+406%), buttressed by a $5.3m tax credit but full year earnings of $20.1m (+184%) still came in below consensus estimate.
- FY17 revenue fell 52% to $263.2m on a 76.8% drop in contributions from development properties to just $76.4m, which resulted in a EBIT loss of $15.7m (FY16: $22.8m profit).
- Sold 399 residential units across Singapore (72), Malaysia (178) and China (149), with total sales value of $357m.
- Retail segment accounted for 55% of revenue and 28% of EBIT.
- Contributions from associates/joint ventures rose 24% to $73.4m due to higher takings from Wing Tai Properties in HK and included an impairment provision of $3.2m for additional buyer's stamp duty payable for The Crest.
- Maintained both final DPS of 3¢ and special DPS of 3¢, similar to FY16.
- Trades at 48% discount to NAV/share of $4.07.

*UG Healthcare
- 4QFY17 net profit crashed 79.5% to $0.1m, dragging FY17 earnings to $2.4m (-55.1%), below estimates.
- This came despite a 22.5% jump in quarter revenue to $16.7m driven by 26% new capacity added, which bought its total capacity to 2.4b gloves pa at end-FY17.
- However, gross margin contracted 4.1ppt to 11.6% due to significant increase in average raw materials prices, gas tariff hike, higher depreciation charge for new production lines and foreign workers' levy.
- Bottom line was also hurt by higher marketing costs from expansion efforts in China.
- Construction is underway to add another 0.5b capacity by end-FY18.
- MKE last had a Sell with TP of $0.25.

*800 Super
- 4QFY17 net profit tanked 36% to $2.7m on a swing to tax expense of $1.2m (4QFY16: $0.3m tax credit).
- This brought FY17 earnings to $17.1m (+2.2%).
- Quarter revenue slipped 3.2% to $38.6m following completion of certain cleaning contracts, but partly offset by contributions from new projects.
- Pretax margin crept 0.2ppt higher to 10.2%.
- Proposed higher final DPS of 3¢ (4QFY16: 2.5¢), bringing full-year payout to 4¢ (FY16: 2.5¢).
- NAV/share at $0.4547.

*Creative
- Swung into 4QFY17 net loss of US$5.6m, bringing FY17 loss to US$22.9m.
- Quarter revenue declined 15% to US$14.5m as the uncertain and difficult market conditions impacted sales.
- Gross margin slipped 0.6ppt to 28.1% on a write-down of excess inventories, while bottom line was dragged by the absence of a write-back of subcontract accruals of US$5m.
- Guided for 1QFY18 operating loss on similar revenue, but a turnaround to net profit due to receipt of a US$31.2m settlement from the US patent infringement lawsuit, as well as an additional US$26m for damages and losses suffered in relation to a wireless broadband project, if no appeal is made by the vendor.
- NAV/share at US$1.06.

POSITIVE NEWS
*China Everbright Water
- Secured contract for Xinyi City Waste Water Treatment Project Phase III, with total investment of Rmb71m.
- The BOT project, which comes with a 24-year concession, will have a designed daily capacity of 30,000 m3.
- It will process municipal waste water and industrial waste water produced by non-chemical enterprises in the Xinyi area in Jiangsu, China.
- Trading at 11.9 forward P/E and 0.91x P/B.

NEUTRAL NEWS
*Raffles Medical
- New substantial shareholder Aberdeen Asset Management purchased 372,300 shares via the market at $1.1367 apiece on 22 Aug.
- The transaction lifted its stake above the 5% mark from 4.9986% to 5.0196%.
- At 1.15, counter is trading at 28.8x forward P/E.

*SingPost
- Retirement of Sam Ang, the CEO of Quantium Solutions since Jul 2016, before Alibaba took a 34% stake in Oct 2016.
- The retirement took place in less than three months after new Group CEO Paul Coutts joined SingPost.

*Mary Chia
- Buyout offer at $0.111 apiece by Suki Sushi.
- This comes after Suki acquired 60.98% of share capital from controlling shareholder Mdm Chia Ah Tow Mary.
- The unconditional offer price is final and Suki intends to diversify the group's business into other complementary sectors.

*Chew's Group
- Updated that its controlling shareholder has entered into negotiations with third party for possible transaction on the group's shares.
- No definitive agreements have been signed.

*Sarine
- Seeking protection under its US patents and copyrights, which allow it file actions to preclude the importation of polished diamonds, manufactured in an infringing manner, into the US.

Thursday, August 24, 2017

SG Market (24 Aug 17)

MARKET OVERVIEW
- The market could drift lower as investors take risks off the table on fears of dysfunctional politics after US President Trump threatened to shut down the government if Congress refuse to fund a border wall with Mexico.
- Technically, the STI remains in oversold territory with underlying support at 3,190 and topside resistance at 3,275.

CORPORATE RESULTS
*IHH Healthcare
- 2Q17 net profit rose 29% to RM316.6m, bolstered mainly by a disposal gain of RM241.1m from the sale of 6.1% stake in Apollo Hospital Enterprise.
- Excluding that, core earnings missed estimates, slumping 54% to RM86.2m, hurt by start-up costs and depreciation from opening of two new hospitals.
- Revenue grew 12% to RM2.77b on organic growth from existing operations and ramp-up of two new HK and Turkish hospitals, as well as the acquisition of Tokuda and City Clinic in Bulgaria.
- But core EBITDA margin narrowed to 19.3% (-3.1ppt) on higher start-up, operating and staff expenses.
- MKE maintains Hold but cuts TP by 1% to RM6.08.

*Health Management Int'l
- 4QFY17 net profit more than doubled to RM10.6m (+119%) following acquisition of remaining stakes in two key hospitals.
- This brought FY17 core earnings, excluding one-off professional fees and non-operational FX loss, to RM32.1m (+40.3%), meeting expectations.
- Revenue for the quarter climbed 5% to RM111.7m, thanks to higher patient loads (+3.7%) and average outpatient bill sizes (+7.8%), which overcome flat inpatient bills (-0.2%).
- EBITDA margin expanded 3ppt to 21.5%, on lower provision of doubtful debts.
- Bottom line was eroded by a spike in finance cost amid a $53m loan drawdown for the stake acquisitions.
- Last traded at 28.4x FY18e P/E.

*Parkson Retail Asia
- 4QFY17 net loss deepened to $43m from $14.9m last year, partly weighed by impairment charges of $25.7m, which swung FY17 results to net loss of $59.5m (FY16: $30.2m profit).
- On the flipside, quarter revenue rose 17% to $109.6m on higher sales during the Hari Raya festival, underpinned by higher same-store-sales growth in Malaysia (+15%) and Indonesia (+11%), while the Vietnam (-14%) operations deteriorated.
- However, gross merchandise margin narrowed 2.8ppt to 61.9% amid higher provision for inventories.
- No final DPS declared (FY16: 0.5¢).
- Trading at 0.56x P/B.

*ISOTeam
- 4QFY17 net profit tumbled 66.5% to $1.3m, which dragged FY17 earnings to $6.4m (-30.1%).
- Quarter revenue slumped 26.5% to $21.7m on a broad-based decline across all segments on fewer projects.
- Gross margin contracted 4.7ppt to 22.9%.
- Bottom line was further impacted by a 13.2% jump in general and admin expenses due to increased allowance for doubtful receivables from a customer under receivership.
- First and final DPS shaved to 0.65¢ (FY16: 0.75¢).
- Trades at 15.4x historical P/E.

POSITIVE NEWS
*Keppel Corp
- Secured a US$400m contract from Honolulu-based Pasha Hawaii for the construction of two LNG fuelled containerships.
- Delivery of the first vessel expected in 1Q20 and the second vessel in 3Q20.
- This brings its ytd order wins to $823m, down from peak of ~$10b in 2011/2012 and $0.5b in 2016.

*Yangzijiang
- 79.6% owned Jiangsu Yangzijiang Offshore Engineering has set up a 40:60 JVCo, Jiangsu Yangzi Chengkang Marine, with total initial capital of Rmb100m.
- The JV will be involved in steel structure fabrication of steel pipe pile for international seas, port, bridge and offshore projects.

*Boustead Projects
- Secured a design-and-build contract from Yusen Logistics Singapore for the addition of a two-floor ramp-up warehouse on an existing logistics facility in Tuas, with completion in 4Q18.
- This lifted the group's order book to $160m (Jun '17: $137m).

*Ausgroup
- 67% owned JV with Meisei Industrial was awarded a A$165m contract extension for work on the INPEX-operated Ichthys LNG Project by JKC Australia LNG.
- Scope of work includes painting, surface protection, fireproofing and insulation works for the onshore facilities.

NEUTRAL NEWS
*Q&M
- Controlling shareholder Quan Min Holdings acquired 300,000 shares at $0.64321 each on 22 Aug.
- The transaction lifted its stake from 43.92% to 43.946%.

*Aoxin
- Controlling shareholder Quan Min Holdings acquired 98,900 shares at $0.215 each on 22 Aug.
- The transaction lifted its stake from 49.61% to 49.64%.

*Ellipsiz
- CEO Melvin Chan Wai Leong acquired 1.5m shares at $0.7525 each on 22 Aug.
- The transaction lifted his stake from 3.76% to 4.65%.

*Metro
- In preliminary discussions with H-Change Real Estate for a proposed divestment of 30% owned associate Nanchang Top Spring at an undisclosed sum.

Wednesday, August 23, 2017

SG Market (23 Aug 17)

MARKET OVERVIEW
- The market is poised for a minor technical rebound from oversold levels amid cautious sentiment as investors look for potential catalysts ahead of the gathering of central bankers at Jackson Hole tomorrow.
- Technically, the STI remains oversold with underlying support at 3,190 and topside resistance at 3,275.

SECTOR WATCH
*Property
- Former HUDC estate Florence Regency has been put up for collective sale at a reserve price of $600m as the en bloc fever rages on in Singapore.
- With a balance 71-year lease, the 336-unit estate at Hougang Avenue 2 has a site area of 389,236 sf and plot ratio of 2.8, which can support a gross floor area of 1.1m sf or 1,100 homes.
- At the minimum bid price of $600m and estimated differential premium of $249m, the land cost works out to $779 psf ppr, with breakeven of ~$1,200 psf.
- This comes barely a day after Normanton Park launched its $800m en bloc offer, with Park West also mulling a sale.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.

CORPORATE RESULTS
*Lum Chang
- FY17 net profit fell 37% to $18.7m, dragged by lower associate income of $1m (FY16: $14.6m) following completion of an EC project last year.
- Revenue slid 13% to $369m on lower contribution from two Malaysian property development projects and completion of certain construction projects.
- Gross margin held steady at 13.5%, while the bottom line was buttressed by a $4.7m disposal gain, $2.9m reduction in fair value loss and absence of a $2.1m asset acquisition stamp duty.
- Final DPS cut to 1.2¢ (4QFY16: 1.25¢), bringing full-year payout to 1.5¢ (FY16: 2¢).
- NAV/share at $0.5791.

*Civmec
- 4QFY17 net profit slumped 35.4% to $1m, pulling down full year earnings to $8.4m (-51.7%).
- For the last quarter revenue grew 10.5% to $97.7m following the commencement of new projects.
- Gross margin held steady at 8.5% (+0.3ppt).
- Bottom line was impacted by higher admin expenses (+40.4%) to secure larger EPC projects, but was partly mitigated by a tax credit of $0.6m (4QFY16: $0.8m expense) on R&D incentives.
- Maintained first and final DPS of 0.7¢.
- NAV/share at $0.3495.

POSITIVE NEWS
*CapitaLand
- Signed agreements to manage Alibaba's Shanghai headquarters and launch an online mall on Lazada Singapore.
- The group will oversee the pre-opening and management of the retail podium and one of the four office towers at the 80,000 sqm gfa Alibaba Shanghai Center in Hongqiao CBD, slated to open in 2018.
- The group will offer a shop-in-shop platform on Lazada.SG that connects its retailers to shoppers both offline and online, complemented by a unique in-mall collection service for online shoppers.

NEUTRAL NEWS
*ComfortDelGro
- Entered exclusive discussions with Uber to form a potential strategic alliance, which could better optimise its fleet and make available its taxis on Uber's ride-hailing app.
- The last-ditch effort comes more than three years after CD's domestic taxi business was disrupted by private car hiring services.
- CD trades at 15x forward P/E and 4.8% dividend yield.

Tuesday, August 22, 2017

SG Market (22 Aug 17)

MARKET OVERVIEW
- The market may range trade as investors look for further direction on global monetary policies ahead of the Jackson Hole meeting of central bankers later this week.
- Technically, the STI is oversold with underlying support at 3,190 and topside resistance at 3,275.

SECTOR WATCH
*Property
- Amid a collective sale fever, 488-unit Normanton Park is making its second stab at selling en bloc with a $800m reserve price.
- This translates to a land cost of $989 psf ppr, which includes a development charge of $225.3m and lease top-up premium of $220.6m.
- The 99-year leasehold site near Kent Ridge Park could potentially be redeveloped into a high-rise development comprising 1,200 new residential units.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.

CORPORATE RESULTS
*Oxley
- 4QFY17 net profit plunged 41% to $41.5m on a 50% drop in other gains to $39.3m and associates loss of $6.9m (4QFY16: $27.9m profit). This took FY17 earnings to $218.1m (+6%).
- For the last quarter, revenue jumped 36% to $224.3m from progressive sales recognition of three projects, The Royal Wharf Phase 1A, Floraville/Floraview/Floravista and The Rise @ Oxley-Residences.
- However, gross margin shrank 13.9ppt to 19.9%, impacted by higher funding costs.
- The decline in bottom line was pared by a positive $24m FX swing and higher fair value gains on financial instruments of $4.3m (4QFY16: $14m loss).
- Net gearing stayed at 1.9x q/q.
- Final DPS raised to 0.7¢ (4QFY16: 0.25¢), bringing full-year payout to 1.5¢ (FY16: 1.4¢).
- Trades at 1.5x P/B.

*Spindex Industries
- FY17 net profit surged 38.9% to $14m on operating leverage.
- Revenue grew 14.2% to $141.8m as growth in machinery & automotive systems (+10%) and others (+42%) outweighed a 5% decline in imaging & printing contributions.
- Gross margin held steady at 23%, while bottom line was bolstered by lower opex (-1.1%).
- Increased final DPS to 3¢ (FY16: 2.3¢).
- Trades at 9.6x trailing P/E.

*Ellipsiz
- FY17 net profit fell 11% to $8.5m on impairment loss of $1.5m on a quoted investment.
- Revenue slipped 2% to $116.7m on weaker contributions from distribution & services (-1%) and probe card solutions (-2%).
- Gross margin improved to 36% on a favourable shift in revenue mix.
- Bottom line was impacted by marginal associates/JVs contributions of $0.2m (-80%) as well as a spike in income tax to $3.1m (FY16: $1.4m).
- Declared final DPS of 2¢ (4Q16: 0.8¢) and special DPS of 4.5¢ (4Q16: 1¢), bringing FY17 payout to 6.5¢ (FY16: 2.5¢).
- Proposed to dispose its probe card solutions business to Japanese manufacturer Nidec for US$65m ($88.3m) or 1.34x P/B.
- If approved, the sale will lift cash hoard to $140.9m, or 27% above its market cap of $111.1m ($0.63/share).
- Trades at 13.1x historical P/E.

POSITIVE NEWS
*The Trendlines
- Set up 51:49 Shanghai-based JVCo, China-Israel New Trend (Taizhou) Medical Technology, with Chinese PE firm Shousan Wealth.
- Plans to raise venture funds to help provide manufacturing and commercialisation support services in China to selected medical companies, both within and outside the group's portfolio.
- Required to establish the venture capital fund within 180 days or else the JV agreement may be terminated.

NEUTRAL NEWS
*Yoma
- Substantial shareholder Aberdeen acquired 8.2m shares at $0.5675 each via the open market on 18 Aug.
- This raised its stake from 9.5662% to 10.0383%.
- At last close, Yoma is valued at 1.5x P/B.

*CapitaLand
- Pared its stake in four wholly owned Vietnamese entities to 40% for US$157m ($213m) through an issue of new units.
- The entities will undertake a commercial development project in Vietnam.

*TSH Corp
- Entered non-binding term sheet with controlling shareholder Teo Kok Woon and another vendor Margaret Louise Batchelor for the proposed acquisition of four commercial properties in Brisbane, Australia, which caters to the beauty and wellness industry.
- Total purchase consideration is A$8m, including $5.2m of outstanding loans, and will be satisfied via new shares at $0.035 each.

*CWG Int'l
- Acquired a 40,612 sqm plot of land with plot ratio of 2:1, in Changsha City, Jiangsu, China for Rmb454m.
- The acquisition is part of efforts to build up its land bank in Tier-3 cities, which are seeing high sales turnover.
- Development of the land parcel is not expected to be completed before 2019.

*DiSa
- Updated that its Point-of-Sale Activation Solution will be used for undisclosed top-rated GPS and navigation products in Wal-Mart stores.

*EnGro
- 98.6% owned unit has formed a 60:40 JV with Omni-Plus System to manufacture and distribute thermoplastic compounds to serve the automotive industry in the Asia ex-China market.

Monday, August 21, 2017

SG Market (21 Aug 17)

MARKET OVERVIEW
- Sentiment remains wary of the White House fallout, which cast doubts on Trump's economic plans, as well as key speeches from ECB and US Fed at the annual Jackson Hole symposium this week.
- Technically, next support for STI is at 3,190, with former support-turned-resistance at 3,275.

POSITIVE NEWS
*Addvalue Technologies
- Set up billing platform to offer airtime services for IP-based voice communications to the maritime industry.
- Teamed up with Thailand partners to commence sale of equipment-cum-airtime bundle services starting from 21 Aug '17.
- Management aims to achieve monthly recurring revenue of US$0.1m in FY3/18.

NEUTRAL NEWS
*CWT
- As part of the pre-conditional offer, the shareholder meeting of HNA Group to approve its $1.4b acquisition of CWT will be held on 7 Sep.
- At last close, CWT trades at a 9.4% discount to the $2.33 offer price.

*Best World
- Controlling shareholders Dora Tan and Doreen Tan each acquired 50,000 shares at average price of $1.10 on 18 Aug.
- This raised their combined interest from 40.725% to 40.734%.

*Enviro-Hub
- Divesting its entire 12% stake in Carros Project Management to Chew Ghim Pok for $24m.
- Sale proceeds will be used for partial repayment of its outstanding $30m term loan.

*OEL
- Acquiring Maxz Universal Development Group for $41.5m in a RTO transaction.
- Consideration will be satisfied via an issue of 92.8m new shares at $0.35 apiece and $9m in cash, following a 20-to-1 share consolidation.
- Maxz Universal Development owns 93.9% of the lessee for Le Meridien hotel on Sentosa in Singapore.
- Following the RTO, the vendors will own 73.5% of the enlarged share base of OEL.

*Starburst
- Several institutional and accredited investors acquired 12.4m placement shares at $0.39 apiece (5.02% share capital) from chairman Edward Lim and managing director Yap Tin Foo.
- The two founders' stake was reduced to 70.97%.

NEGATIVE NEWS
*Dukang Distillers
- Issued negative profit warning for FY6/17.
- The weak set of results was attributed to 1) significant impairment loss for non-current assets and 2) prolonged severe air pollution and poor weather conditions, which led to stricter inspections and enforcements and impacted baijiu production and operations.

Friday, August 18, 2017

SG Market (18 Aug 17)

MARKET OVERVIEW
- Stocks could come under pressure after the STI breached its 50-dma support yesterday, while sentiment could be further rattled by the US selloff on Trump policy worries.
- Technically, next support for STI is at at 3,190, with former support-turned-resistance at 3,275.

CORPORATE RESULTS
*Croesus Retail Trust
- 4QFY17 DPU of 2.01¢ (+18.2%) brought FY17 payout to 7.66¢ (+12.2%), above expectations.
- Gross revenue jumped 11.9% to ¥2,993m, bolstered by three acquisitions, as well as higher variable rent from better tenant sales in Mallage Shobu and a strong performance by the cinema in Torius.
- But NPI was relatively flat at ¥1,441m (+0.1%) from higher expenses in new acquisitions and refurbishment works.
- Distributable income of ¥1,272m (+19%) was boosted by cost savings from the internalisation of the trustee-manager, lower finance cost and disposal gain of units.
- Portfolio occupancy slipped 0.6ppt q/q to 97.1%, while aggregate leverage contracted 1.5ppt q/q to 44.6%.
- Offers 6.7% yield with NAV/unit at $0.98.

POSITIVE NEWS
*SGX
- Formed a committee with Singapore Institute of Surveyors and Valuers, to review valuation practices and reporting carried out by real estate valuers.
- This is to better serve investor interest, particularly in REITs and business trusts following some questionable transactions.
- SGX trades at 21.8x forward P/E.

*China Everbright Water
- Clinched two waste water treatment upgrading projects in Shandong, China, worth Rmb41m.
- The first project is a Rmb27m treatment project in the Binzhou Development Zone, while the second is for CNY14m upgrading works at Ju County Chengbei.
- Counter is trading at 12.5x forward P/E.

*GCCP Resources
- Secured RM16m worth of contracts to supply crushed calcium carbonate stones to a MNC in Malaysia and Indonesia.
- The contracts will run till end-2017 and expected to contribute positively to FY17 financials.
- This brought new contracts secured-to-date to more than RM31m.

*Aspen
- The group awarded a RM442m contract to Kerjaya Prospek to construct Vertu Resort in Aspen Vision City, Batu Kawan, Penang, Malaysia.
- Vertu Resort comprises five condominium blocks with a total of 1,246 units, which will be built on top of an eight-storey car park podium.
- The project is expected to commence on 4 Sep '17 and be completed within 38 months.

NEUTRAL NEWS
*Sembcorp Industries
- Subscribed to rights issue by subsidiary Sembcorp Green Infra, including excess rights of partner IDFC Private Fund III, for Rp1b ($21.4m), thereby raising its stake from 68.74% to 72%.
- Proceeds will be used to fund its growth in the renewable sector in India.

*OCBC
- Acquired 0.68m shares in Great Eastern for $24.90 apiece on 17 Aug.
- This raised its stake in its insurance arm to 87.9% from 87.75%.

*Best World
- Controlling shareholders Dora Tan and Doreen Tan both acquired 200,000 shares each at an average $1.195 and $1.18875, respectively, on 17 Aug.
- This lifted direct interests for both shareholders from 5.6113% to 5.6476%, and total interest between the two shareholders from 40.6887% to 40.725%.

NEGATIVE NEWS
*Profit warnings
- Tiong Woon
- CFM Holdings
- Boldtek

Thursday, August 17, 2017

SG Market (17 Aug 17)

MARKET OVERVIEW
- The market could see some respite after FOMC policy makers hinted of a slower pace of interest rate hikes amid weak inflation. But this is not favourable for banks, which are also embroiled in a widening debt crisis besetting several O&G service providers.
- Technically, the STI closed near its support at 3,275 following the formation of a bearish engulfing candle on Mon. A move below this level would take it to the next support at 3,190. Topside resistance remains at 3,360.

STOCK COVERAGE
*GuocoLand
- MKE initiated with a Buy and TP of $2.75, based on a 22% discount to its RNAV/share of $3.55.
- The under-researched mid-cap property developer, backed by Malaysian tycoon Quek Leng Chan, is seeing structural improvements to its financials, with scope for stronger recurring income, lower gearing and higher DPS post completion of its Tanjong Pagar Centre mixed development.
- With four residential project worth a combined gross development value of $5b, the group is a beneficiary of a Singapore property price rebound. Singapore accounts for 70% of its valuation.
- Trades at 44% discount to RNAV and 0.67x P/B.

CORPORATE RESULTS
*Avi-Tech
- 4QFY17 net profit surged 61.5% albeit from a low base to $2.2m, supported by a $0.6m swing to $0.1m tax credit.
- This brought FY17 earnings to $7m (+13%), meeting street estimates.
- Revenue grew 29.2% to $12m on growth across burn-in board manufacturing & PCBA services (+44.2%), burn-in services (+8.7%) and engineering services (22.2%).
- Gross margin contracted 2.2ppt to 27.4% on the change in sales mix.
- Net cash position improved to $23m (3QFY16: $19m) or $0.134/share.
- Declared 0.8¢ special DPS on top of an unchanged final DPS of 1¢.
- Trades at 9.8x forward P/E.

*Hatten Land
- 4QFY17 net profit tripled to RM59.7m as revenue rose 24% to RM130m on higher progressive sales recognised from Hatten City Phase 2 and Harbour City projects.
- Gross margin expanded to 56.2% (+18.7ppt) on reduced development costs stemming from the local government's assistance scheme.
- Bottom line was further boosted by a RM5.6m write-back of RTO professional fees and lower tax expense (-66.5%) due to over provision last year.
- Declared maiden interim DPS of 0.05¢.
- NAV/share at RM0.1654.

POSITIVE NEWS
*Keppel Corp
- Disposing its entire 100% stake in China residential development project Waterfront Residences, in Nantong, China, for Rmb1.43b ($292m).
- The divestment is in line with the group's strategy to recycle assets to seek higher returns to focus on high-growth cities in China.
- Post-sale, the group expects to recognise a $75m gain, which will lift pro forma FY16 NTA/share to $6.39 (+0.8%).

*Yanlord
- Moody's has reaffirmed the developer's Ba2 credit rating with stable outlook.
- The ratings agency cited Yanlord's better-than-average profitability and interest coverage, as well as its strong liquidity profile.
- Stock trades at 0.82x P/B.

*Spackman
- Secured 220m won (US$0.2m) contract to supply camera systems and equipment for upcoming crime thriller movie Deceptive Murder.
- Trades at 7.1x forward P/E.

*Creative Technology
- Awarded $36m in damages against China's Huawei for breach of contract over a failed nationwide wireless broadband project in 2012.
- The award will be recognised in 1QFY18 results if Huawei does not appeal against the judgement, which could raise its NAV/share by 33% from US$1.14 to US$1.516.
- The group has previously won a US$100m settlement with Apple in 2005 over patent infringements and another claim in 2015 involving its unit ZiiLabs' patents.
- Currently trades at 0.68x P/B.

*Sarine Tech
- South Korea's jewellery retail chain, Golden Dew, has launched the Sarine Profile in-store diamond display platform in all its 72 stores.
- The retailer will also adopt the Sarine Connect diamond jewellery search and display app.
- Trades at 17.3x forward P/E.

NEUTRAL NEWS
*Best World
- Conducted share buy-back of 114,000 shares at an average $1.365 apiece over 15-16 Aug.
- Stock trades at 14.1x FY18e P/E.

*Far East Group
- Selling a 60-year leasehold property at 5 Third Lok Yang Road for $3.9m, subject to regulatory approval.
- If completed, the sale will reap a disposal gain of $2.7m and proceeds will be used for the acquisition of a property at 51 Ubi Ave 3 and/or repay outstanding debt.
- Trades at 0.37x P/B.

*ISDN
- Formed 30:70 JV with HK-listed Comtec Solar Systems to set up and operate a 1MW distributed generation solar power station at ISDN's Suzhou industrial park in China.
- The industrial park will purchase power from the JVCo at market price for 20 years.
- Total investment into the JVCo will not exceed Rmb8m.

Wednesday, August 16, 2017

SG Market (16 Aug 17)

MARKET OVERVIEW
- The market may succumb to profit-taking as 2Q results season winds to an end and investors await FOMC minutes for clues on the Fed's interest rate path.
- Of the >100 companies tracked, 22% surpassed 2Q earnings estimates, while 32% missed, down from 28% and 36% respectively in 1Q17.
- Technically, STI exhibited a bearish engulfing candlestick yesterday, which point to near term weakness. Support for the index is at 3,275, with topside resistance is at 3,360.

CORPORATE RESULTS
*Healthway Medical
- Dipped into 1QFY18 net loss of $0.5m (1QFY17: $0.5m profit), weighed by a surge in finance costs (+163.1%) and income tax (+134.5%).
- Revenue slid 6.2% to $23.2m on declines across primary healthcare (-$1.1m) and specialist & wellness healthcare (-$0.4m) segments.
- Gross margin held steady at 81% (1QFY17: 79.6%) but operating cash flow deteriorated to negative $4.2m.
- While the operating environment continues to be challenging, the group is well-capitalised following the $60m issuance of convertible notes in Apr.
- SGX has requested it to appoint an independent reviewer to look into loan extensions to related parties.
- Trades at 0.7x P/B.

POSITIVE NEWS
*SIA
- Jul operating statistics showed higher group passenger load factor of 83.6% (+1.5ppt) as traffic (+4.1%) outpaced capacity growth (+2.2%).
- Cargo load factor rose 2.5ppt to 63.2%.
- Parent load factor improved for routes to Americas (+3ppt), Europe (+4.5ppt), West Asia and Africa (+2.4ppt), although South West Pacific (-2ppt) deteriorated, while East Asia was muted (+0.5ppt).
- Load factor for SilkAir (+4.5ppt to 76.6%) was also better but that budget carrier (-0.2ppt to 84.7%) weakened slightly.
- Trades at 0.94x P/B.

*Oxley
- Maiden hotel development at Stevens Road has received TOP on 3 Aug and will likely open end 2017.
- The $900m project will have two hotels - 254-room Novotel and 518-room Mercure and includes some commercial space.
- Trades at 1.73x P/B.

*Libra Group
- Secured three projects worth $42m.
- Works include the erection of a 5-storey residential building with scheduled completion in 2018, a sub-contract for architectural works at Lentor Station (completion: 2020) and a sub-contract for architectural works at Stevens Station (completion: 2020).
- Trades at 21.8x trailing P/E.

*Miyoshi
- Entered a joint marketing agreement with NEC Asia Pacific for sale of a high-performance face-recognition surveillance related product in Singapore, Malaysia and other Asia Pacific region.
- NEC's NeoFace® Watch with real-time facial recognition will be integrated with Miyoshi's wireless audio/video wearable solution.
- The upcoming product will offer on-ground security officers with instant analysis of what they see and enable them to provide actionable intelligence to commanders.
- Trades at 18.1x trailing P/E.

NEGATIVE NEWS
*Best World
- Explained that it has yet to convert its business to direct selling in China after its shares and other similar MLM firms slumped amid a government crackdown against pyramid schemes.
- All its products are currently sold at outlets and workshops under the export model and the clampdown will have little impact on its China business.
- For now, MKE is keeping its Buy rating and TP of $1.88.

*Parkson Retail Asia
- Expected to report FY17 net loss of $62m (FY16: $30m profit) due to retail headwinds and asset write-downs following a comprehensive review.

NEUTRAL NEWS
*United Engineers
- Independent financial adviser SAC Capital views a takeover bid led by Perennial Real Estate and Yanlord Land as fair and reasonable.
- The consortium triggered the mandatory takeover offer at $2.60/share after buying over the 33.5% stake from OCBC, Great Eastern and other vendors for $729.7m.
- Trades at 1.03x offer price and 0.89x P/B.

*XMH
- Entered into a 50:25:25 JV with Myanmar MarcoPolo and Bulox Power to manufacture and/or assemble transformers, generator sets and power solution products in Myanmar.
- It will invest an initial US$0.5m in the JVCo.

*GKE
- Disclosed that discussions with a potential investor are still ongoing.

*Singapore eDevelopment
- Collaborating with US-based Chemia Corp to develop specialised fragrances to counter mosquito-borne diseases and stress and anxiety, as well as anti-viral medical applications.

Tuesday, August 15, 2017

SG Market (15 Aug 17)

MARKET OVERVIEW
- The market could regain some footing as US-North Korea tensions ease but news flow could dry up as the 2Q results season draws to an end.
- Technically, STI faces topside resistance is at 3,360, with support at 3,275.

CORPORATE RESULTS
*Golden Agri
- Headline 2Q17 net profit tumbled 45% to US$21.9m due to recognition of deferred tax last year but core earnings turned around to US$53.4m from US$6.4m loss previously, beating estimates.
- Revenue edged up 0.8% to US$1.76b, supported by stronger palm production of 639,000 tonnes (+41%), although average CPO price slipped 1% to US$670/MT.
- EBITDA margin expanded 3.3ppt to 8.2% on better operational efficiencies across all segments.
- NAV/share at US$0.32.

*Yanlord Land
- 2Q17 net profit surged 43% to Rmb462.5m, lifting 1H17 earnings to Rmb1.4b (+139%), meeting expectations.
- This was despite a 42.2% drop in revenue to Rmb4.28b on lower gfa delivered (-50.9%) to customers, in line with its delivery schedule.
- Bottom line was shored by increase in car park sales, lower FX loss and higher share of associate contributions from projects with better profit margins.
- NAV/share at Rmb10.66.

*Bumitama Agri
- 2Q17 net profit surged 165% to Rp285.04b, bringing 1H17 earnings to Rp563.5m (+67.2%) or 47% of full year consensus estimate.
- Revenue jumped 39.5% to Rp1.92t, which was attributable to higher sales volume of CPO (+44.9%) and palm kernel (+33.8%), underpinned by a 3.6% rise in CPO ASP.
- Gross margin expanded 11.6ppt to 29.3%.
- Bottom line was further bolstered by a Rp4.27b swing to FX gain and absence of a Rp5.01b associate loss.
- Declared interim DPS of 0.75¢ (2Q16: nil).
- NAV/share at Rp4,036.

*Accordia Golf Trust
- 1QFY18 DPU grew 9.8% to 2¢, exceeding expectations on distributable income of ¥1.79b (+17.6%).
- Revenue ticked up 1.1% to ¥14.57b on a 4.1% increase in visitors due to lower pricing promotions held during non-peak days.
- Operating margin expanded to 22% (+1.4ppt) on lower opex (-0.6%).
- Course utilisation rate rose 3.2ppt to 84.2%, while loan-to-value stood at 29% (+0.1ppt).
- Trades at 11.4% annualised yield and 0.79x P/B.

*HRnetGroup
- 2Q17 net profit declined 10.3% to $7.3m, dragged by one-off listing expenses. Otherwise, core earnings improved 22%.
- Revenue of $97.4m (+6.4%) hit a record, driven by the increase in flexible staffing in Singapore.
- Gross margin slipped 2.1ppt to 34.9% on a shift in sales mix.
- Expansion plan through M&A is gaining good traction and the group disclosed it has been receiving enquiries and approaches on potential acquisition and collaboration opportunities.
- NAV/share at $0.2858.

*Q&M Dental
- 2Q17 hadline earnings spiked 269% to $13.6m, boosted by a one-time gain of $9.4m from the spin-off of Aoxin.
but underlying net profit rose 29% to $4.3m, meeting estimates.
- Revenue slumped 22.7% to $29.6m on deconsolidation of Aidite to an associate, while takings from dental and medical clinic (-7%) and equipment & supplies (-42%) were both lower.
- Five dental outlets were added, taking its total to 73, while medical outlets and aesthetic centre remained at four and one, respectively.
- Interim DPS raised to 0.7¢ (1H16: 0.42¢).
- Trades at 33.4x forward P/E.

*Aoxin Q&M
- 1H17 underlying net profit jumped 43% to Rmb6.5m, as revenue rose 22% to Rmb47.6m.
- Improved sales was driven by a 64% spike in dental equipment and supplies distribution due to more contracts secured, while primary healthcare saw relatively stable growth with 9% higher takings.
- Headline earnings of Rmb1.4m (-84%) was dragged by listing expenses amounting to Rmb5.2m.
- NAV/share at Rmb0.629.

*Nam Cheong
- Dived to 2Q17 net loss of RM2.02b (2Q16: RM3m profit), ditched by an asset impairment of RM1.88b.
- Revenue rose 29% to RM151.2m on sale and delivery of two vessels and the addition of three vessels in the chartering fleet.
- Gross margin narrowed 5.4ppt to 8% on lower profitability of the shipbuilding segment.
- Bottom line was also impacted by FX loss of RM17.4m.
- Negative equity/share at RM0.334.

Monday, August 14, 2017

SG Market (14 Aug 17)

MARKET OVERVIEW
- Traders will mull over the simmering global tensions in North Korea and Venezuela although an outbreak of military hostilities is highly unlikely, as well as FOMC minutes this week.
- At home, Singapore's Jul export data will show if 2Q economic momentum can be sustained.
- Technically, downward momentum for the STI expected to persist, with immediate support at 3,275 likely to be tested, followed by 3,250. Topside resistance is at 3,320.

CORPORATE RESULTS
*ComfortDelGro
- 2Q17 net profit reversed 6.8% to $79.4m, sending 1H17 earnings to $161.9m (+2.1%), missing estimates.
- Revenue slipped 3.4% to $987.2m, mainly dragged by its taxi business (-10.7%), which suffered in Singapore (smaller operating fleet), Britain (weak sterling) and China (lower double-shift rates), while bus and rail services (+1.3%) benefitted from increased ridership.
- Operating margin narrowed 0.7ppt to 11.3% on increased staff costs (+1.3%) and depreciation (+5.4%).
- Interim DPS raised to 4.35¢ (1H16: 4.25¢), representing a higher dividend payout ratio.
- Management expects revenue for most business segments, expect public transport services in S'pore and Australia, to decline in FY17.
- Trades at 15.8x forward P/E.

*Thai Beverage
- 3QFY17 net profit surged 2.6x to Bt15.2b, with the bulk (Bt8.5b) stemming from fair value gain arising from its stake in Vinamilk. Otherwise, core net profit grew 15.4% to Bt6.8b.
- Revenue dipped 0.4% to Bt45.28b on slower sales in beer (-7.1%) and non-alcoholic beverages (-4.2%), partly mitigated by stronger sales in spirits (+4.6%).
- Core EBTIDA margin expanded to 20.4% (+1.9ppt) on stronger associate income (+155%) from F&N and Frasers Centrepoint.
- Near term risk from excise tax hike on 12 Sep.
- Trades at 21.7x forward P/E

*Ezion
- Dived to 2Q17 net loss of US$2.6m (2Q16: US$8.1m profit), widening 1H17 loss to US$15.3m.
- Revenue slumped 19.5% to US$67.4m on lower charter rates and a drop in utilisation of both jack-up rigs and offshore support vessels.
- Gross margin compressed to 9.9% (2Q16: 21.3%, 1Q17: 12.8%).
- Net gearing remained elevated at 1.04x (1Q17: 1.0x).
- Trading at 0.23x P/B.
- Called for trading suspension to facilitate discussions over its financing and capitalization structure.

*Olam
- 2Q17 core net profit jumped 34.1% to $154m, bringing 1H17 core earnings to $297.8m (+23.6%), beating estimates.
- For the quarter, revenue climbed 30.9% to $6.52b, buoyed by higher overall trading volume (+28.6%).
- However, EBITDA margin slipped to 5.7% (-0.6ppt) on unrealised FX losses.
- Adjusted gearing inched slightly higher to 0.81x (1Q17: 0.79x).
- Declared higher interim DPS of 3.5¢ (1H16: 3¢).
- NAV/share at $1.983.

*Asian Pay TV
- Flat 2Q17 DPU of 1.625¢ was in line with estimates.
- Revenue rose 6.2% to $83.1m on positive FX effects. In constant TWD terms, contribution from all three segments declined on lower ARPUs across basic cable TV (-3.2%), broadband (-4.6%) and premium digital cable TV (-0.2%).
- EBITDA margin inched up 0.5ppt to 60.2%.
- Reaffirmed guidance for FY17 DPU of 6.5¢, implying 11.3% yield.
- NAV/unit at $0.85.

*Valuetronics
- 1QFY18 beat as net profit surged 64.8% to HK$48.7m on improved operational leverage.
- Revenue jumped 45.7% to HK$695.7m, lifted by consumer electronics (+91.8%) arising from the introduction of new products with Internet of Things features, and underpinned by higher demand in industrial & commercial electronics (+21.3%).
- Gross margin dipped 1ppt to 15% on the shift in sales mix.
- Healthy net cash pile of HK$719.3m, or $0.30/share.
- NAV/share at HK$2.40.

*First Resources
- 2Q17 net profit declined 11.4% to US$23.2m, dragged by higher tax expenses (+46.2%).
- This brought 1H17 earnings to US$71.6m (+127.5%) or 45% of FY17 street estimate.
- Revenue dipped 0.6% to US$134.6m, but EBITDA rose 8.4% to US$57.2m due to higher ASPs of processed palm based products.
- Operating margin expanded 1.7ppt to 31.2%, on higher write-back of accruals for employee related expenses.
- Bottom line was weighed by a swing to fair value loss of US$0.8m (2Q16: US$1.9m gain) on derivative financial instruments.
- Interim DPS hiked to 1.25¢ (1H16: 0.625¢).
- Management expects yield to strengthen in 2H17 as a result of continued recovery from the effects of El Nino.

*Bukit Sembawang
- 1QFY18 net profit tumbled 78.3% to $6m, reaching just 17% of the street's sole FY18 forecast.
- Revenue slumped 64.7% to $15.8m on lower sales and profit recognition from development projects Skyline Residences and Watercove.
- Operating margin contracted to 42.4% (-8.1ppt) on the absence of booking fee forfeitures.
- NAV/share at $4.95.

*Dasin Retail Trust
- 2Q17 DPU of 1.53¢ beat its IPO forecast by 7% on stronger-than-expected distributable income of $3.8m (+12%).
- Revenue and NPI of $11.3m and $9.3m was 21% and 22% higher than IPO forecast due to higher takings and the earlier-than-expected completion of the acquisition for Shiqi Metro Mall.
- Portfolio remains fully occupied, while aggregate leverage remained at 31.8%.
- Trades at annualised yield of 7.4% and 0.55x P/B.

*Hotung
- 2Q17 net profit surged 187% to NT$74.7m, as revenue leapt 2.2x to NT$193m, boosted by proceeds from sale of investments (+113%).
- However, bottom line was weighed by a jump in impairment losses of NT$64.8m (2Q16: NT$3.7m).
- NAV/share at $3.01.

*Metro
- 1QFY18 net profit leapt more than 2.6x to $25.4m, lifted by a disposal gain of $8.3m at the associate level.
- Revenue edged 1.7% higher to $32.4m on higher sales from the retail division.
- However, gross margin contracted to 3.4% (-1.4ppt).
- Bottom line was further shored up by another disposal gain of $0.8m arising from its Shanghai investment property, as well as distribution from investments ($1.3m).
- NAV/share at $1.66.

*Zhongmin Baihui
- 2Q17 net profit slumped 63.9% to Rmb19.3m in the absence of write-back of free-rent incentives (-91.2%).
- Revenue grew 16.5% to Rmb234m on strength in direct sales (+25.4%) and commissions (+10.6%), but partially offset by declines in rentals (-30.6%) and managed rental (-46.3%).
- Gross margin contracted to 30.4% (-5.8ppt) on weaker profitability from direct sales activities.
- Cut second interim DPS to 0.5¢ (2Q17: 1¢).

*Hong Leong Asia
- 2Q17 net loss of $18.2m stayed flat (2Q16: $18.3m loss) as reduced attribution to minorities were wiped out by a contraction in gross margin to 17.6% (-2ppt).
- Revenue grew 3.5% to $1.03b on stronger performance from diesel engine unit China Yuchai (+8.3%), but offset by declines at the building materials unit (-24.7%) and consumer products division (-2.6%).
- NAV/share at $1.7383.

*Jadason Enterprises
- Turned around to 2Q17 net profit of $0.7m (2Q16: $1.2m loss), bringing 1H17 earnings to $1m (1H16: $0.9m loss).
- Revenue jumped 42% to $15.4m, attributed to growth in both equipment & supplies (37.8%) and manufacturing & support services (+44.3%) segments.
- Gross margin expanded to 21% (+6.2ppt), which gave rise to improved operational leverage.
- NAV/share at 6.9¢.

*Katrina
- 1H17 net profit crashed 77% to $0.3m, as revenue dipped 1.6% to $27.7m on slow sales, despite an increase in the number of outlets.
- Gross margin contracted 6.3ppt to 9.3%, while pretax margin was shaved to 1.5% (-4.7%) due to stubborn fixed overheads.
- Notably, operating cash flow were almost nil (1H16: $2.1m).
- NAV/share at $0.0583.

*Dyna-Mac
- Swung into 2Q17 net loss of $12.8m (2Q16: $6.4m profit).
- Revenue crashed 84.2% to $5.4m on lower number of projects, which resulted in a gross loss of $6.2m (2Q16: $14.4m profit).
- Bottom line was further impacted by an adversed swing into FX loss of $0.9m from $3.1m gain last year.
- NAV/share at $0.1349.

*Mermaid Maritime
- 2Q17 net profit slumped 53.3% to US$3.6m, dragged by reduced associate income from Asia Offshore Drilling due to lower day rates.
- Revenue declined 10.8% to US$44.9m on reduced subsea income (-10.4%) following a finished cable lay project and day rate reduction in IRM activities and lower utilisation of vessels.
- Consequently, pretax margin almost halved to 8% (2Q16: 15.7%).
- NAV/share at US$0.24.

*Overseas Education
- 2Q17 net profit slid 31.5% to $1.5m, as stubborn operating expenses failed to decline in tandem with sales.
- Revenue slid 7.6% to $22.6m, on lower student enrolments which led to reduced tuition (-7.2%) and registration (-15.7%) fees.

Friday, August 11, 2017

SG Market (11 Aug 17)

MARKET OVERVIEW
- Batch of downbeat results and escalating geopolitical tensions in North Korea are expected to weigh on sentiment.
- Technically, MACD for the STI is exhibiting a bearish crossover. Underlying support for the index lies at 3,275 with topside resistance at 3,360.

CORPORATE RESULTS
*SingTel
- 1QFY18 headline net profit of $891.6m (-5.6%) trailed estimates.
- Revenue rose 8.3% to $4.23b as stronger Australia (+6%) operations were met with stable Singapore business (+2%).
- However, EBITDA margin contracted 1.6ppt to 30% (4QFY17: 30.4%) on higher equipment sales and increased content and programming costs.
- Contribution from regional associates slipped 2.5%, as Airtel continued to face aggressive price war in India.
- FY18 revenue guidance tweaked from mid single digit to low single digit growth, while EBITDA is expected to be flat.
- Trades at 14.9x forward P/E with dividend yield of 4.9%.

*City Dev
- 2Q17 net profit fell 17.9% to $109.9m, bringing 1H17 earnings of $195.3m (-18.3%) to 33% of full year consensus estimate.
- Revenue slumped 21.8% to $854.1m following the TOP of Lush Acres EC and Jewel@Buangkok in 2Q16, although partly offset by healthy sales at Gramercy Park, Coco Palms and The Venue Residences, as well as handover of units in China for Hongqiao Royal Lake and Hong Leong City Center.
- Hotel operations improved from addition of Grand Millennium Auckland and M Social Hotel to its portfolio and better performances from is NY and London hotels.
- Rental properties suffered from disposal of Exchange Tower in Oct '16 and closure of Le Grove Service Apartments for a major revamp plus FX loss booked by CDLHT.
- Bottom line was impacted by absence of one-off gains of $12.7m and JV loss of $4.8m (2Q16: $9.8m profit) after the completion of JV projects, namely Bartley Ridge and Echelon.
- On outlook, management sees stronger activity in the Singapore residential market.
- Maintained special interim DPS of 4¢.
- Trades at 13% discount to its RNAV/share of $13.48 and 1.14x P/B.

*Wilmar
- Turned around to 2Q17 core net profit of US$37.3m against US$220.3m loss a year ago and US$361.6m profit in 1Q17.
- This brought 1H17 core earnings of US$349.9m to 28% of full-year consensus estimate.
- Revenue rose 13.2% to US$10.6b on back of higher commodity prices and stronger sales in oilseeds and grains as well as sugar businesses
- EBITDA margin expanded 2.5ppt to 2.9% from higher soybean volume and positive crush margins.
- Headline earnings of US$60.2m (2Q16: US$220.1m loss) were lifted non-operating investment gain of US$24.1m (2Q16: US$1.2m).
- Interim DPS raised to 3¢ (1H16: 2¢).
- Trading at 13x forward P/E.

*Noble Group
- Blew out a 2Q17 net loss of US$1.75b after taking a massive US$1.26b writedown on the value of its commodity contracts and derivative instruments.
- Revenue fell 19% to US$10.05b on a 20% slump in sales volume, while supply chain income plunged to a US$266.9m loss, hurt by significant credit constraints.
- Notably, operating cash outflow of US$763m (1Q17: US$278m outflow) translated to a sizeable expansion in adjusted net debt-to-capital to 55.2% (1Q17: 29.6%).
- Debt reduction remains a priority.
- NAV/share almost haved to US$1.60/share.

*ST Engineering
- 2Q17 net profit slipped 12.3% to $111.5m, weighed by a swing into operating loss for the marine segment.
- This brought 1H17 earnings to $215m (-9.5%), or 40% of FY17 street forecast.
- Quarter revenue improved 8.2% to $1.76b led by strong growth in electronics (+40%) which outweighed the slump in marine (-34%), while other core segments aerospace (+3%) and land systems (+1%) were stable.
- Operating margin slipped 1ppt to 7.4% on poor performance in marine due to weak industry conditions and US shipyard, as well as an unfavourable sales mix in electronics.
- Order book remained strong at $13.5b (1Q17: $13.3b).
- Management tweaked FY18 pretax profit guidance lower from higher to now comparable, while revenue guidance remains comparable.
- Interim DPS maintained at 5¢.

*IREIT Global
- 2Q17 DPU slid 9.4% to 1.45¢, as €0.6m was retained from distributable income of €6.4m (+0.6%).
- 2Q17 gross revenue and NPI rose to €8.8m (+4%) and €7.8m (+2.7%), due to inflation-linked rental adjustment and one-off compensation from a tenant.
- Portfolio occupancy slipped 1.1ppt q/q to 98.7%, while aggregate leverage fell 0.8ppt q/q to 41.3%.
- Last traded at 2Q annualised yield of 7.3% and 1.18x P/B.

*SBS Transit
- 2Q17 net profit surged 77.7% to $15m thanks to a 30% slide in other operating costs within its public transport services segment.
- Revenue grew 7% to $287.8m on increased ridership across DTL (+14.1%), NEL (+1.4%) and LRT (+6.1%), although partially pared by reduced contribution from other commercial services (-15.3%).
- Bottom line was bolstered by reduced fuel and electricity cost (-10.4%).
- Hiked interim DPS to 3.65¢ (2Q16: 2.35¢).
- NAV/share at $1.40.

Thursday, August 10, 2017

SG Market (10 Aug 17)

MARKET OVERVIEW
- The market is expected to turn risk-off on renewed geopolitical worries.
- Technically, MACD or the STI has exhibited a bearish crossover. Underlying support for the index lies at 3,275 with topside resistance at 3,360.

CORPORATE RESULTS
*F&N
- 3QFY17 net profit surged 59.9% to $60.7m mainly from increased associate income arising from its 18.74% stake in Vinamilk.
- This brought 9MFY17 net profit to $87m (+15.8%) or 76% of the FY17 consensus estimate.
- However, revenue in the quarter slipped 8.6% to $483.1m on weaker contributions across beverages (-17.1%) and dairies (-3.3%) on competitive pricing pressures, as well as reduced contribution from printing & publishing (-9.2%).
- Bottom line was weighed by increased FX loss of $4.6m (3QFY16: $0.9m loss) although mitigated by higher investment income of $33.4m (+107.3%).
- NAV/share at $1.98.

*Jumbo
- 3QFY17 results missed estimates on a 1.1% slip in net profit to $3.4m, as operating expenses rose at a faster pace from business expansion.
- Revenue grew 6.4% to $34.8m on increased contributions across Singapore and China outlets.
- Gross margin held at 62.7% (-0.2ppts).
- Opened its fourth China outlet in Beijing last month and first franchised restaurant in Ho Chi Minh City in May.
- Trades at trailing P/E of 24.6x.

*ISEC Healthcare
- 2Q17 net profit of $1.9m (+12%) came in at the low end of estimates.
- Revenue climbed 12% to $9.2m, bolstered by new contributions from four recently-acquired general clinics in Singapore.
- Gross margin held relatively steady at 47.3% (-0.2ppt).
- Interim DPS raised to 0.5¢ (2Q16: 0.22¢).
- Last traded at 20x FY17e P/E.

*Hong Leong Finance
- 2Q17 net profit soared 89% to $20.9m, mainly helped by lower interest expense (-30.2%) and reduced staff costs (-6.4%).
- However, on the back of a smaller loan base of $9.56b (-4.8%), net interest income declined 10.1% to $54.8m.
- Proposed higher interim DPS of 4¢ (2Q16: 3¢).
- NAV/share at $3.85.

*QAF
- 2Q17 net profit slumped 72% to $8.1m in absence of a $9.7m disposal gain booked last year from sale of its 20% stake in the KL business.
- Revenue edged 1% higher to $209.8m from rise in bakery operations (+5%) on strength in Philippines, but was pared by weakness in primary production (-2%) on lower ASPs.
- Bottom line was hit by higher distribution costs due to higher fuel prices.
- Maintained interim DPS at $0.01.
- NAV/share at $0.934.

*BHG Retail REIT
- 2Q17 DPU was flat at 1.35¢ despite a larger unit base (+4.7%).
- Revenue rose 3.2% to $15.8m on positive rental reversion and improved occupancy, although pared by a weaker yuan, while NPI rose at a faster clip to $10.9m (+5.7%) from favourable tax in China.
- Portfolio occupancy edged up 0.3ppt q/q to 98.9%, while aggregate leverage ticked 0.1ppt lower to 32.4%.
- Trades at 2Q annualised yield of 7.3% and 0.88x P/B.

*Fragrance Group
- 2Q17 net profit climbed 3.1% to $3.8m, on 14% rise in revenue to $34.9m.
- Top line benefitted from higher property development contribution from City Gate project, improved occupancy in investment properties, and newly acquired The Imperial Hotel in UK.
- Gross margin expanded 5.9ppt to 41.6%, bolstered by its new UK hotel.
- Bottom line was dragged by an absence of tax credit.
- NAV/share at $0.157.

*Boustead Projects
- 1QFY18 net profit slipped 5% to $5.8m as revenue dropped 25% to $45.7m.
- The decline in sales was due to weakness in the design-and-build segment (-28%) on reduced work progress and less contracts secured, while leasing (-7%) was impacted by AusGroup's early lease termination of the 36 Tuas Road property.
- Gross margin expanded to 32% (+10ppts) from improved productivity and cost savings from projects.
- NAV/share at $0.736.

*MoneyMax
- 2Q17 net profit jumped 20% to $1.7m on lower taxes.
- Revenue leapt 37% to $41.1m on stronger pawnbroking business, as well as retail and trading of pre-owned items.
- However, gross margin of 26.4% (-3.6ppt) was squeezed by higher material costs.
- Bottom line was alsoy weighed by increased operation costs due to the business expansion in Singapore and Malaysia, as well as higher finance costs.
- NAV/share at $0.1844.

*Rotary Engineering
- 2Q17 net profit tumbled 43% to $1.2m, from contraction in gross margin to 22% (-7.1ppts) and FX loss of $0.3m (2Q16: $0.3m gain).
- Revenue grew 21% to $62.8m on newly secured projects.
- NAV/share at $0.285.

*QT Vascular
- Swung to 2Q17 net loss of US$5.6m (2Q16: US$15.2m profit) in absence of a US$24.1m write-back for legal liability.
- Revenue jumped 47.8% from a low base to US$3.5m on increased sales of chocolate® PTA Balloon Catheter to Medtronic.
- However, gross margin compressed 19.5ppt to 26.6% following the termination of distribution agreement with Cordis.
- Net liability value at US$0.01/share.

Monday, August 7, 2017

SG Market (07 Aug 17)

MARKET OVERVIEW
- The market is likely to drift lower in the holiday-shortened week, with investors focused on next batch of results from Singtel, City Dev and ST Engineering.
- Technically, the STI faces topside resistance at 3,360, with downside support is at 3,275.

SECTOR WATCH
*Property developers
- Brisk demand for new private homes continued unabated following another good take-up during the weekend launch of Le Quest, a 516-unit mixed development in Bukit Batok.
- Developed by Qingjian Realty, the 99-year leasehold project, all 280 units available were snapped up at an average price of $1,280 psf.
- MKE prefers UOL and City Dev for exposure to the residential sector.

CORPORATE RESULTS
*UOL
- 2Q17 results were in line as net profit jumped 59% to $109.4m on higher sales recognition from Principal Garden condo project, higher contributions from associates and fair value gains on investment properties.
- Revenue climbed 10% to $399.1m, with property development (+19%) accounting for 55% of turnover, while its hotel business was flat.
- The group plans to launch tow condo projects next year - 140-unit freehold development at Amber Road and a 750-init project at Potong Pasir Avenue 1.
- Trades at 0.79x P/B.
- MKE last had a Buy with TP of $9.05.

*Venture Corp
- 2Q17 net profit surged 61% to $69.8m, beating expectations on improved operational leverage.
- Revenue leapt to to $1.01b (+48.3%) to cross $1b for the first time, underpinned by strong execution of customers' orders.
- Gross margin dipped 1.6ppt to 21.9%, but pretax margin improved 0.7ppt to 8.3%.
- Last traded at 17.8x FY17e consensus P/E.

*Jardine C&C
- 2Q17 net profit of US$188.7m (+0.9%) was bolstered by fair value gains of US$15.4m. Excluding the non-trading items, core net profit fell 9.4% to US$173.3m, bringing 1H17 earnings to US$375m (+13%), or 43% of full-year consensus estimate.
- For the quarter, revenue rose 6% to US$4.29b, while operating margin was stable at 8.6% (-0.1ppt).
- Astra's profit contributions fell 5% to US$130.8m on declines across automotive (-21%), financial services (-8%),agribusiness (-35%), infrastructure & logistics (-41%), with only its heavy equipment business (+70%) doing well.
- Direct motor interests (-7%) were also hit by poor earnings from Malaysia (-55%) and Indonesia (-41%), with Vietnam (+10%) and Singapore (+4%) holding up.
- Interim DPS of US$0.18 was maintained.
- NAV/share at US$15.19.

*Cosco Shipping
- 2Q17 net loss narrowed to $20.8m (2Q16: $36.8m loss), shored by a positive FX swing of $14m.
- Revenue slid 31% to $524.7m, as persistent weakness in its core shipyard (-31.6%) business overshadowed improved contribution from the dry bulk shipping (+4.7%) due to higher charter rates.
- Gross margin widened 2.4ppt to 3.9%.
- Bottom line was lifted by a $32m write-back on trade receivables, although partly knocked by a $9.6m disposal loss and $7.6m drop in tax credit.
- Last traded at 3x P/B.

*Manufacturing Integration Tech
- Turned around to 1H17 net profit of $2.8m (1H16: $0.8m loss).
- Revenue leapt 52% to $33.1m on strong orders, underpinned by the upcycle in the semiconductor industry and impending new major handset launches, as well as better contract equipment manufacturing business.
- Gross margin expanded 9ppt to 34%.
- Declared maiden interim DPS of 0.25¢ (1H16: nil).
- Order book stood at $22.4m at 4 Aug '17, with management expecting recent momentum for new orders to persist.
- Net cash increased to $19.7m (8.8¢/share or 34% of market cap) from $14.1m in Dec '16.
- NAV/share at $0.2234.

*Chip Eng Seng
- 2Q17 net profit plummeted 94.3% to $0.8m, partly hit by higher provisions relating to a construction project.
- Revenue sagged 9.3% to $212.6m, mainly dragged by property development (-8.2%) and construction (-13.8%) divisions, while both hospitality (+5%) and property investments (+13%) improved on higher occupancies.
- Gross margin shrank 5.6ppt to 17% on the shift in revenue mix.
- Bottom line was impacted by higher marketing expenses for Grandeur Park Residences, which was launched in Mar '17, and the newly opened Maldives resort Grand Park Kodhipparu.
- Construction order book increased to $538.4m (1Q17: $457.2m).
- NAV/share at $1.2025.

*Yeo Hiap Seng
- 2Q17 net profit tumbled 35% to $5.3m despite realising a $5.4m FX gain on liquidation of subsidiaries.
- Revenue dropped 22.7% to $87.2m, as F&B sales were undermined by pricing pressure and transition to new distributors in Cambodia, as well as absence of $1.6m dividend income from the divested Super Group.
- Gross margin contracted 9.3ppt to 30.2%.
- Declared a special DPS of 2¢ (2Q16: nil).
- NAV/share at $1.1464.

*Sarine
- 2Q17 net profit slumped 46.5% to US$3.2m, bringing 1H17 earnings to US$5.7m (-36.9%), or just 27% of full-year consensus estimate.
- Quarter revenue slipped 13% to US$18.2m on lower sales due to the illicit competition in India.
- Gross margin narrowed 0.7ppt to 68.4%.
- Bottom line was weighed by higher operating expenses from R&D (+11.4%) and general & admin cost (+14.5%) due to professional fees.
- NAV/share at $0.3051.

*Challenger Technologies
- 2Q17 net profit inched up 2% to $3.8m on lower taxes (-23%).
- Revenue slid 14% to $78.7m, weighed by weak performances in retail and tradeshow divisions.
- Gross margin widened 2ppt to 22.3% following closure of several underperforming retail outlets.
- Maintained interim DPS of 1.1¢.
- NAV/share at $0.2336.

*CEI
- 1H17 net profit declined 22.7% to $3.6m, as revenue slipped 2.1% to $67.5m.
- Operating margin contracted 1.8ppt to 6.3% due to absence of a $0.5m write-back of provision, and higher staff cost amid increased headcounts to support higher order book for 2H17.
- Order book increased to $53.1m (FY16: $46.8m), and majority of orders are expected to be fulfilled in 2017.
- Maintained interim DPS of 1.04¢, but cut special DPS to 3¢ (1H16: 3.76¢).
- NAV/share at $0.453.

*Nera Telecommunications:
- 2Q17 net profit dropped 40% to $1.4m, as taxes spiked more than double, albeit pared by absence of an FX loss (2Q16: $1.8m).
- Revenue slipped 1.3% to $50.3m amid lower sales for network infrastructure in Singapore and Australia.
- Gross margin shrank 2.6ppt to 23.4% on a shift in product mix and lower project write-back.
- Bottom line was also eroded by higher staff costs.
- Maintained interim DPS of 1¢.
- NAV/share at $0.1899.

*GSH
- Turned around to 2Q17 net profit of $71.7m (2Q16: $3.2m loss), mainly due to a $74.9m disposal gain arising from sale of its entire 51% stake in GSH Plaza.
- Revenue surged 73% to $30.6m on stronger property development (+146%), as well as hospitality (+40%) due to higher occupancy and average room rates at its two hotels in Sabah, Malaysia.
- Gross margin narrowed 2ppt to 45%.
- Excluding disposal gain, however, bottom line was hurt by a spike in staff costs and increased finance expenses.
- Proposed special DPS of 1¢ (2Q16: nil)
- NAV/share at $0.212.

*Multi-Chem
- 2Q17 net profit of $3.9m (+175%) was boosted by $3.5m disposal gain.
- Revenue grew 31% to $105.6m, bolstered by core IT division (+39.3%), which outweighed a drop in the PCB segment (-56.9%) due to lost capacity after the disposal of drilling machines in China.
- Gross margin shrank 2.9ppt to 13.7% amid reduced profitability in IT.
- Net cash position improved to $44.7m ($0.49/share, or 54% of market cap) from $39.2m in FY16.
- Maintained interim DPS of 1.11¢.
- NAV/share at $1.0755.

*AF Global
- 2Q17 net profit slumped 33% to $1.5m on absence of FX gains (2Q16: $1.4m).
- Revenue rose 5% to $12.9m, bolstered by higher hotel contribution, while leisure and property businesses were muted.
- Gross margin widened 1.2ppt to 46.1%, and bottom line was also cushioned by higher JV profit (+$0.9m).
- NAV/share at $0.25.

*GCCP Resources
- 2Q17 close to breakeven with net profit of RM0.3m (2Q16: RM4.4m loss).
- Revenue spiked 113% to RM5.2m, due to increase in orders of ground calcium carbonate (GCC) stones.
- Gross margin expanded to 76% (+20ppts) due to ready stocks of GCC limestone from previous extraction activities.
- Group expects performance in the following months to be sustained by a step-up contract from another major customer.
- NAV/share at RM0.07.

*Serial System
- 2Q17 net profit edged higher to US$3.4m (+3%) on lower taxes (-26%) and reduced associate losses (-20%).
- Revenue slipped 1% to US$373.9m as stronger contribution from distribution of electronic components (+14%) was offset by a slump in consumer products (-83%).
- Gross margin expanded to 7% (+0.4ppts) on a favourable shift in sales mix.
- Interim DPS hiked to 0.29¢ (2Q16: 0.18¢).
- NAV/share at US$0.1511.

*Federal Int'l
- 2Q17 net profit rose 10.2% to $1.2m, despite a 137.1% spike in revenue to $43.7m, led by higher sales from the Zawtika 1C project.
- However, gross margin narrowed 8.1ppt to 14.4% due to lower profitability from the trading segment.
- Bottom line was further impacted by higher admin costs (+8.6%) on increased insurance for its land rig and professional & consulting fees arising from to its Indonesian operations.
- NAV/share at $0.601.

Friday, August 4, 2017

SG Market (04 Aug 17)

MARKET OVERVIEW
- Stocks may face some profit-taking as positive momentum wane following their ytd outperformance against regional peers and on SGD strength.
- Technically, the STI faces topside resistance at 3,360, with downside support is at 3,275.

CORPORATE RESULTS
*DBS
- 2Q17 net profit of $1.14b (+8%) met estimates on higher net interest income of $1.89b (+3%) on back of healthy 6% loan growth but NIM narrowed 7bps to 1.74% (flat q/q) due to lower SGD rates.
- Non-interest income declined 4.6% to $1.04b as growth in wealth management (+37%) was offset by lower investment banking fees (-51%), trading income (-4%), net income from investment securities (-18%) and absence of fixed asset gains.
- Provisioning fell 17% to $304m on reduced specific allowances, especially for Singapore
- NPL ratio ticked up to 1.5% (2Q16: 1.1%, 1Q17: 1.4%) but capital position remained strong with Tier 1 CAR at 14.4%.
- Declared higher interim DPS of $0.33 (+10%) reflecting management's confidence in its earnings and capital buffers.
- Trading at 1.26x P/B.

*Sembcorp Industries
- 2Q17 net profit slumped 36.1% to $55.3m, dragging 1H17 earnings of $174.4m (-10%) to 45% of full-year consensus estimate.
- Revenue climbed 23.2% to $2.28b, driven by higher utilities turnover (+75%) but partly offset by a weaker showing in the marine (-28%) segment.
- Earnings from utilities tumbled 42% to $43m, hit by a $33.9m refinancing cost of a thermal power plant in India.
- Marine earnings more than halved to $3.3m (-54%), hurt by lower contribution from rigbuilding and offshore platform projects, as well as FX translation loss.
- Interim DPS was cut to 3¢ (2Q16: 4¢).
- NAV/share at $3.85.

*Hongkong Land
- 1H17 underlying net profit jumped 32% to US$517m, meeting 55% of full-year consensus estimate.
- Revenue surged 65.8% to US$1.29b mainly on higher sales completion of residential and mixed-use projects in China and Singapore, as well as higher average rents from HK investment properties.
- Due to the shift in sales mix, operating margin contracted 18.9ppt to 39.3%.
- Maintained interim DPS of US$0.06.
- Last traded at 0.52x P/B.

*Ascendas Hospitality Trust
- 1QFY18 DPS climbed 1.6% to 1.31¢, bolstered by lower financing costs, but still missed expectations.
- Gross revenue rose 2.2% to $53.5m as stronger AUD and higher RevPar from Australian and Japanese assets was dented by lower rental income from Park Hotel Clarke Quay in Singapore.
- NPI slipped 0.3% to $22.3m on higher staff and commission expenses in Australia.
- Aggregate leverage crept up 0.5ppt to 32.7%, with average debt cost of 2.8% and tenor of 2.5 years.
- Last traded at 1Q annualised yield of 6.2% and 0.94x P/B.

*Lippo Malls Indonesia Retail Trust
- 2Q17 DPU rose 5.9% to 0.9¢, lifting 1H17 payout to 1.79¢ (+6.5%).
- Quarter revenue grew 6.6% to $49.9m on positive rental reversions (+13%) and acquisition of Lippo Mall Kuta.
- NPI climbed 8.6% to $46.8m (+8.6%) after it outsourced a new car park to an operator who would absorb all operating costs in return for a portion of the parking revenues.
- Portfolio occupancy ticked up 0.5ppt q/q to 94.3%, while aggregate leverage reduced by 1.6ppt q/q to 30.6%.
- Last traded at 2Q annualised yield of 7.9% and 1.23x P/B.

*OUE
- 2Q17 net profit tumbled 72.6% to $7.1m in the absence of an impairment write-back (2Q16: $27.8m).
- Revenue jumped 39.5% to $187.3m on higher unit sales at OUE Twin Peaks and new contribution from healthcare segment under IHC.
- Gross margin contracted 6.5ppt to 36.5% on the shift in sales mix.
- Bottom line was weighed by higher minority interest of $7.9m (+34.2%) arising from the dilution of interest in OUE Commercial REIT and consolidation of IHC.
- Maintained interim DPS of 1¢.
- NAV/share at $4.38.

*Mandarin Oriental
- 1H17 underlying net profit slumped 39% to US$15m, forming 26% of full-year street estimate.
- Revenue of US$286.7m (-0.5%) was largely flat as contribution from US (+31.9%) was pared by reduced takings in Europe (-16.5%) due to ongoing renovation works at Mandarin Oriental Hyde.
- This led to a 25.7% declined in operating profit to US$22.5m.
- Strategic review of the Excelsior Hong Kong remains ongoing.
- Maintained interim DPS of US$0.015.
- Last traded at 0.52x P/B.

*Hi-P Int'l
- 2Q17 net profit doubled to $15.1m despite absence of a $10.5m disposal gain, and turned around 1H17 earnings to $23.5m (1H16: $4.7m loss), 34% of full-year estimate.
- Revenue inched 2% lower to $279.5m, while gross margin widened 4.9ppt to 12.2% on higher operational efficiency and a favorable shift in product mix.
- Bottom line was also helped by utilisation of unused tax losses from prior years.
- Net cash position ballooned to $156.5m (FY16: 25.1m), or 19.4¢/share.
- Proposed interim DPS of $0.19 (2Q16: nil).
- Management guided flattish revenue but higher profits for FY17 on stronger 2H17 performance relative to 1H17.

Thursday, August 3, 2017

SG Market (03 Aug 17)

MARKET OVERVIEW
- Tech plays are expected to be in focus today after iPhone maker Apple surged to record highs on a 2Q earnings beat and positive outlook, and plastic injection manufacturer Sunningdale posted solid results.
- Technically, the STI faces topside resistance at 3,360, with downside support is at 3,275.

CORPORATE EARNINGS
*CapitaLand
- Excluding portfolio and reval gains, 2Q17 recurring net profit of $206.8m (+20.5%) came in within expectations.
- Revenue slipped 12.3% to $992.4m on fewer new unit sales in Singapore.
- However, bottom line was lifted by higher contributions from China development projects and rental income from newly acquired properties.
- Net gearing eased to 0.39x (1Q17: 0.44x).
- Trades at 28% discount to its RNAV/share of $5.25.
- MKE last had a Hold with TP of $3.75.

*StarHub
- 2Q17 net profit fell 21% to $85.7m but beat estimates on lower-than-expected recontracting subsidies.
- Service revenue of $542.6m (-2%) was dragged by lower mobile ARPU and shrinking pay TV and broadband subscriber base.
- This led to narrower EBITDA margin of 33.2% (-1.5ppts).
- Quarterly DPS was cut to 4¢, down from 5¢ in 2Q16.
- Management maintained FY17 EBITDA margin guidance of 26-28% and DPS of 16¢, which translates to 5.9% yield.

*Genting Singapore
- Returned to the black with 2Q17 net profit of $143.3m (2Q16: $10.5m loss), beating expectations.
- Revenue jumped 24% to $596.1m as gaming revenue soared 33% to $442.3m on higher win percentage in the premium player business.
- Adjusted EBITDA margin widened 25ppt to 49.1%, helped by a sharp drop in bad debt impairment to $14.7m (-73%).
- Declared interim DPS of 1.5¢ (2Q16: nil).
- MKE maintains Buy but raises TP to $1.35 from $1.25

*OUE Commercial REIT
- 2Q17 DPU of 1.15¢ (-15%) was diluted by an enlarged unit base (+19%), but was in line with estimates.
- Gross revenue of $44.2m (-3%) was weighed by lower one-off income despite stronger operational performance at all three properties - One Raffles Place, OUE Bayfront, Lippo Plaza.
- Portfolio occupancy improved 0.6ppt q/q to 96.4%, while aggregate leverage ticked up to 36.4% (+0.2ppt q/q).
- Offers 2Q annualised yield of 6.3% and trades at 0.85x P/B.

*Sunningdale
- 2Q17 net profit soared 115% to $8.2m, beating expectations,
- Excluding FX effects and retrenchment costs, core earnings would have come in at $10.9m (+57.1%) against full year estimate of $34.5m.
- Revenue climbed 6.6% to $177.6m as growth in automotive (+7.9%) and consumer/IT (+11.4%) businesses more than offset weakness in healthcare (-4%) and mould fabrication (-2%) segments.
- Gross margin expanded 1.8ppt to 15.6% on increased operational efficiency.
- Bottom line was partly dragged by an adverse FX swing of $4m but this was offset by absence of one-off restructuring cost (2Q16: $4.6m).
- Declared maiden interim DPS of 2.5¢.
- Last traded at 11.2x FY17e P/E.

*BreadTalk
- 2Q17 net profit jumped 61.9% from a low base to $2.1m, lifted mainly by other income of $5.7m (+18.7%).
- However, revenue slipped 1.5% to $147.6m on weaker contributions across bakery (-3.3%) and food atrium (-2.7%), although partly mitigated by stronger takings from restaurants (+3.7%).
- Gross margin inched higher to 55.9% (+0.9ppt) on lower cost of sales (-3.5%).
- Interim DPS doubled to 1¢ (2Q16: 0.5¢).
- Currently trades at 25.9x forward P/E.

*Halcyon Agri
- Swung back to 2Q17 net profit of US$1.7m (2Q16: US$8m loss), buttressed by associate income of US$5.3m (2Q16: nil).
- This brought 1H17 earnings to US$12.8m (1H16: US$14.6m loss).
- For the quarter, revenue surged 166% to US$527.7m on higher rubber prices and greater sales volume (+79.6%) following the acquisition of Sinochem's rubber assets and GMG Global in 4Q16.
- Gross margin widened 1.5ppt to 6.1% on improved processing efficiency.
- However, operating profit of US$5.6m (2Q16: US$1.7m loss) was insufficient to offset finance cost of US$6.2m.
- NAV/share at US$0.5245.

*Far East Orchard
- 2Q17 net profit plummeted 97.3% to $1m on a drop in JV contribution due to the absence of one-time gains arising from the sale of units at SBF Center.
- Revenue fell 19.4% to $36m on weaker performance from two hospitality assets in Perth, Australia, as well as absence of contribution following the completion of certain lease agreements.
- Bottom line was shored by lower FX loss of $1.5m (-36.1%).
- Trades at 0.5x P/B.

POSITIVE NEWS
*Cogent Holdings
- Received patent from Taiwan authorities for the design of its Cogent 1. Logistics Hub's sky depot.

NEUTRAL NEWS
*GLP
- Replaced its independent financial adviser ANZ with Evercore Asia Singapore.
- This came after concerns that ANZ's financial ties with one of the members in the offeror's consortium could compromise its independence for the proposed takeover of GLP.

Wednesday, August 2, 2017

SG Market (02 Aug 17)

MARKET OVERVIEW
- The broad market could edge higher on positive sentiment, buoyed by record highs in Wall Street overnight.
- Technical indicators are stretched with STI facing topside resistance at 3,360, while downside support is at 3,275.

CORPORATE RESULTS
*CWT
- 2Q17 net profit soared 266% to $49.9m, boosted by a $23.1m gain on disposal of financial assets.
- Revenue grew 9% to $2.59b from the finalisation of a design and build project, as well as commodity marketing (+7.3%) due to increase in commodity prices and higher volume of naptha traded.
- Gross margin widened 0.46ppt to 3.29%.
- Adjusted net gearing rose to 0.25x (Dec '16: 0.18x) with total bank facilities of $4.8b and liquidity headroom of $3.8b.
- Trading at 13.3x FY17e P/E and 1.4x P/B.

*OUE Hospitality Trust
- 2Q17 performance met expectations as DPS surged 31.5% to 1.21¢ on distributable income of $21.8m (+31.8%), with income support of $1.6m from Crowne Plaza Changi Airport (CPCA).
- Revenue rose 16% to $31.2m from higher master lease income at Mandarin Oriental Singapore and CPCA, and increased occupancy of 93.9% (2Q16: 79.1%) at Mandarin Gallery shopping mall following completion of AEI works.
- Accordingly, NPI jumped 15% to $26.6m.
- Aggregate leverage inched up 0.1ppt q/q to 38.2%, with lower average debt cost of 2.8% (+0.3ppt q/q) and tenor of 1.9 years (1Q17: 2.1 years).
- Trades at 6.5% forward yield and 1x P/B.

*Tiong Seng
- 2Q17 net profit more than doubled to $10.2m (+126.7%), on a 37% jump in revenue to $216.7m.
- The improved turnover was lifted by its construction segment (+49% to $205.7m) from new and ongoing projects, but partly offset by a slump in property development (-47% to $10.6m) due to absence of sale recognition from Tranquility Residences.
- Operating margin was steady at 6.2% (+0.4ppt).
- Bottom line was shored by lower FX loss from depreciation in CNY against SGD.
- However, construction order book was depleted to $730m (1Q17: $924m, 4Q16: $1b).
- NAV/share at $0.5887.

*PACC Offshore
- 2Q17 net loss narrowed to US$9.1m (2Q16: US$17.5m loss), shored by JV profit of US$4.6m (2Q16: US$3.1m loss) as POSH Terasea completed major towage and positioning projects.
- This brought 1H17 net loss to US$27.5m (1H16: US$13.1m loss), or 61% of full-year loss estimate.
- Quarter revenue declined 8% to US$42.4m amid challenging conditions, dragged by a 24% drop in contribution from offshore accommodation vessel segment.
- The group swung to a gross loss of US$2.7m, reversing from a US$1.6m profit in 2Q16.
- Bottom line was cushioned by a US$6.2m reduction in allowance for doubtful debts.
- Last traded at 0.57x P/B.

*UnUsUaL
- 1QFY18 net profit leapt 152% from a low base to $1.5m, in tandem with a 166% jump in revenue to $6.2m, thanks to its promotion (+$2.8m) and production (+$1.7m) segments.
- Gross margin doubled to 45.6% (+22.8ppt) on the shift in sales mix.
- Management is seeking opportunities to expand its concert repertoire into North Asia, particularly China.

*k1 Ventures
- FY17 net profit rose 6.7% to $150m despite a 51.7% drop in revenue to $94.2m due to an absence of investment income from Knowledge Universe Holdings.
- Bottom line was boosted by a a fair value gain of $119m arising from its investment in Guggenheim and divestment of KUE 3 LP.
- Proposed final DPS of 6.5¢ (FY16: nil).
- NAV/share at $0.76.

Tuesday, August 1, 2017

SG Market (01 Aug 17)

POSITIVE NEWS
*Vibrant
- 31% owned Vibrant Pucheng acquired a 217,788 sqm land in Chongqing, China, for Rmb176.4m.
- The 50-year leasehold land will be redeveloped into a multi-modal logistics distribution centre, in line with China's "one belt one road initiative" and the Chongqing Connectivity Initiative between Singapore and China.

*Datapulse Technology
- Divesting 15A Tai Seng Drive by granting a 1-month option to a third party, for $53.5m.
- The six-storey industrial building, with production and warehouse areas, spans 15,174 sqm gfa and has remaining lease term of 36 years.
- Group expects to realise net gain of $44.5m upon estimated deal completion on 30 Nov '17.
- Proceeds will be used to acquire a new premise for existing business operations, working capital, and future investment opportunities.

*Azeus
- Secured two IT projects worth HK$19.4m from the Hong Kong government, both involving data migration onto new platforms.
- One of the projects include support & maintenance services for five years following the roll-out.
- This brought Jul '17 order win from the HK government to HK$98.5m, with pipeline extending to 2023.

*Rotary Engineering
- Gasemas, 50%-owned by group's controlling shareholder and chairman Roger Chia and his family, is chartering a double hull oil tanker with cargo capacity of 123,000 m3 from the group.
- The charter is priced at US$15,000/day, for a term of six months commencing 1 Aug '17 and the option for a six-month renewal.
- This is expected to improve group's operating cash flows.

*ValueMax
- Acquiring Heng Leong Pawnshop for $5.3m, (1.24x P/B) to expand its revenue stream.

*Aspen Holdings
- Proposed sale of a 43,560 sf freehold land at Bandar Kassia Batu Kawan, Penang, for RM6.53m.
- The buyer will be developing a petrol kiosk within the township and is expected to complement Aspen's other development projects in the vicinity.
- Group is expected to realise net gain of RM2.9m from the sale.

*A-Smart
- Clinched a $1.2m contract to supply a smart enterprise business solution to a local restaurant chain.
- The contract includes consultancy, maintenance and system licensing for five years.

*QT Vascular
- Begun enrollment in US for its drug-coated peripheral balloon with the intention of obtaining regulatory approval.
- The product is for use in superficial femoral and popliteal arteries.

NEGATIVE NEWS
*Healthway Medical
- Group President, Veronica Chan, has resigned to pursue other interests.
- Resignation comes after the company recently faced liquidity issues in settling overdue payroll and debt obligations.

*P99
- Terminated its proposed acquisition of a United Engineers' unit, UES for $65m.
- As a result, the company will undertake a voluntary liquidation and distribute surplus cash back to shareholders.
- At last update, NAV/share stood at 3.62¢.

*Genting HK
- Issued profit warning, expecting a 1H17 net loss of US$200-220m, excluding the share of results from Travellers Int'l Hotel Group, which owns Resorts World Manila.
- It blames operating losses at Crystal Cruises due to competitive environment, start-up losses in its new German yards and additional depreciation and interest for the new Genting Dream ship for the red ink.

*Other profit warnings
- Heatec Jietong
- GS Holdings
- TPV Technology

NEUTRAL NEWS
*Bukit Sembawang
- Substantial shareholder Aberdeen Global sold 111,100 shares at an average $6.7923 each on 27 Jul.
- The sale via market will pare its stake below the 5% mark from 5.0208% to 4.9779%.